Stellar Bancorp, Inc. Announces Redemption of Subordinated Notes

Rhea-AI Summary

Stellar Bancorp (NYSE: STEL) announced that its subsidiary, Stellar Bank, plans to redeem all of its $40.0 million Fixed-to-Floating Rate Subordinated Notes due December 15, 2027. The redemption price will be 100% of the principal amount plus any accrued and unpaid interest up to the redemption date. Noteholders will receive detailed instructions regarding the redemption process.

Positive

• Full redemption of $40 million in debt obligations indicates strong financial position
• Early debt retirement could reduce future interest expenses

Negative

• Reduction in available capital by $40 million from debt redemption

Insights

Financial Analyst

The redemption of $40 million in subordinated notes marks a significant balance sheet optimization move by Stellar Bancorp. Subordinated notes typically carry higher interest rates compared to other forms of debt, making their early redemption a strategic decision to reduce interest expenses. The redemption at par value (100% of principal) suggests the company has sufficient liquidity and is confident in its capital position. This action will likely improve the bank's cost of funding and enhance profitability metrics going forward. The timing aligns with the current high-rate environment where refinancing options may be more favorable. For investors, this demonstrates proactive liability management and financial strength, though the immediate impact on earnings per share will depend on the funding source for the redemption.

HOUSTON--(BUSINESS WIRE)-- Stellar Bancorp, Inc. (the “Company”) (NYSE: STEL) today announced the intention of Stellar Bank, its wholly-owned subsidiary (“the Bank”), to redeem all of the Bank’s $40.0 million aggregate principal amount of Fixed-to-Floating Rate Subordinated Notes due December 15, 2027 (“the Notes”). The redemption price for the Notes will be equal to 100% of principal amount of the Notes redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date.

In accordance with the Notes, the holders of the Notes will receive notice of the redemption, the redemption price and further instructions and details related to the process of such redemption.

About Stellar Bancorp, Inc.

Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. The Company’s principal banking subsidiary, Stellar Bank, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across the Houston, Dallas, Beaumont and surrounding communities in Texas.

Forward-Looking Statements

Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the Company’s merger with Allegiance Bancshares, Inc. (the “Merger”), including future financial performance and operating results, the Company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology.

All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: the risk that the cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized; disruption to our business as a result of the Merger; the risk that the integration of operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; the amount of the costs, fees, expenses and charges related to the Merger; reputational risk and the reaction of our customers, suppliers, employees or other business partners to the Merger; changes in the interest rate environment, the value of Stellar’s assets and obligations and the availability of capital and liquidity; general competitive, economic, political and market conditions; and other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms.

Additional factors which could affect the Company’s future results can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https://www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241025265092/en/

Investor relations:

IR@stellar.bank

Source: Stellar Bancorp, Inc.

FAQ

What is the total value of subordinated notes being redeemed by Stellar Bancorp (STEL)?

Stellar Bancorp (STEL) is redeeming $40.0 million in aggregate principal amount of Fixed-to-Floating Rate Subordinated Notes.

When are Stellar Bancorp's (STEL) subordinated notes originally due to mature?

The subordinated notes were originally due to mature on December 15, 2027.

What is the redemption price for Stellar Bancorp's (STEL) subordinated notes?

The redemption price is 100% of the principal amount plus any accrued and unpaid interest up to the redemption date.